Shelly Felagai, Financial Adviser
Growth Focus – Ipswich Financial Planning and Accounting
Are you wanting to increase your savings in super while potentially reducing tax?
Utilising your unused concessional contributions cap may be an effective way to achieve this.
Let’s start with understanding what Concessional super contributions are. These contributions are those that are made to your superannuation fund before tax is applied. They consist of employer contributions, salary sacrifice contributions, and personal tax-deductible contributions. It is important to be mindful that a concessional contribution cap applies to these types of contributions, and if the cap is exceeded, you may have additional tax to pay.
Now this is the exciting part! If you have unused concessional cap amounts from previous years, you may have the option to carry them forward and use them to maximise your superannuation contributions later. You will qualify to do this if;
- Your superannuation balance is under $500,000 at the end of the previous financial year
- Have unused concessional contribution amounts in accordance with the cap from up to five previous years – (no later than 2018/2019 FY)
Here is an example of how this would be applied to a client scenario.
Jenny has a superannuation balance of $300,000.
Her contributions for the previous 5 years are as follows:
| Financial Year | Contribution Cap | Employer Contributions |
| 2023 -24 | $27,500 | $12,198 |
| 2022 – 23 | $27,500 | $11,987 |
| 2021 – 22 | $27,500 | $10,098 |
| 2020 – 21 | $25,000 | $9,876 |
| 2019 – 20 | $25,000 | $8564 |
| TOTAL | $132,500 | $52,723 |
Her available cap would therefore be $132,500 – $52,723, equaling $79,777.
Jenny has recently sold an investment which has resulted in her taxable income being $240,000 for the 23/24 FY – if Jenny contributes $79,000 to her superannuation fund as a carry forward contribution, her taxable income will be reduced to $161,000 considerably reducing her tax liability.
Carry-forward concessional contributions offer a fantastic opportunity to improve your superannuation balance and reduce your tax obligations. If you would like to find out more or to see if you are eligible to utilise this strategy – please contact our Ipswich Financial Planning team today on 07 3812 1420 or email help@getgrowth.com.au!
This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.